Home of Slightly Cracked Dreams

With the 2009-2010 budget handed down last night, finance nerds like me are busy pouring over newspaper coverage and figuring out what it all means.

Over on Lightening’s blog yesterday she posted why she’s against paid maternity leave.

Today I’m going to share my thoughts and explain why it’s really a bit of a non-event.

1. We are behind the times. The only developed nation without a paid maternity leave scheme now is the USA. Even Afghanistan has a program of paid maternity leave.  Support it or not, this is one area we have lagged behind the rest of the world.

2. We have other maternity payments. A $5000 baby bonus is currently paid for families where the primary carer earns less than $150,000 a year. There is also the ongoing Family Tax Benefit A & B payments as well as child care benefit, child care rebate and immunisation allowance .

I’m generally in favour of these payments. Having children is expensive, and however much Baby Boomers complain about it, someone’s going to have to be working to care for them in their old age, and pay taxes so they can have their pension.

Women, in persuit of a career, are putting off motherhood, increasing the need for fertility treatments andthe likelyhood of multiple births. Having children is becoming a financial decision - do you have them young and sacrifice a career and a solid foundation (ie a home and sable incomes) or do you wait, and face increased costs in the form of fertility treatment and potential multiple births.

What these payments do is take the financial aspects out of the equation. If people don’t want children, no $5000 bonus or 18 weeks paid maternity leave will encourage them. On the other hand, if people DO want children, the additional money may make it more feasible and allow them to choose the time to increase their family without basing the decision on financial considerations.

Having said all of that, this scheme is a paid maternity leave in name only.

$544 a week less tax (of $62) is $482 a week for 18 weeks, or $8676.

For women who don’t qualify for this payment, there is still the $5000 baby bonus paid in 13 fortnightly payments, and the ongoing Family Tax Benefits A & B, potentially bringing the amount to a total of $7484 in six months.

Either way you look at it, there’s a fair amount of money there to help take the sting out of the costs associated with welcoming a new family member, be it the furniture required, or the drop from two incomes to one.

In reality, this is a scheme that simply renames money mostly already being spent and fulfils a government promise at little to no additional expense.  However, it is a change that is long overdue and brings us in line with the rest of the developed world.

What do you think? Long overdue or are we not ready for it? Is it too much? Too little? What should they have done differently?